crude oil will rise to 100 million barrels per day demand for OPEC+ crude will also rise marginally and compliance with quota will remain important. If members are in compliance. The price of brent could be average about $75 per barrel. Brent’s price is roughly the same thing as Bonny. Light, which is the benchmark crude for Nigeria.
He added that the dual exchange rates in the country will continue and CBN will use it improve oil and gas revenues or maybe some of the external reserves to shore up. We estimate it will close at about N430 to $1 where we see continued pressure on the parallel market exchange rates unless the CBN inject some money into the parallel market, we are going to be closing at N610 to N620 to the dollar at the end of this year.
He stated that, “federation accounts should grow by about 15 per cent. The bulk of the growth we said will come from VAT and company’s income tax. The federal government’s share of these revenues and independent would be about N5 trillion and that is our most aggressive estimates. Local currency debts of the FGN will grow to about N44 trillion or about nine times of her revenues. The median for key countries in sub-Saharan Africa is about two times.
“Because of the high cost of servicing these debts at commercial rates, the CBN will continue to accommodate the FGN by lending to them at rates below inflation, thus reducing FGN’s borrowing requirement from the markets and put a downward pressure on interest rates as banks, pension funds, insurance companies and other institutional investors compete for government securities.
“The banking industry’s local currency loans will grow by about 10 per cent in nominal terms but growth will still be negative after adjustment for inflation. Loan growth will continue to be constrained by above normal cash reserve requirements. Banking industry profitability will remain weak because of a high level on non-earning cash reserves, continuation of the AMCON levy beyond the ten years initially agreed and higher effective tax rate.
True this government must be forced to manage available resources well. CBN is not working in public interest when it refuses to put a cap on how much it lends to the federal government. Every kobo given by CBN to FG is a loan that must be paid back via taxation. So citizens pay4
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